Unmasking BlackRock: Is This Financial Titan Secretly Controlling the World? 🕵️‍♂️

I’m standing in front of the headquarters of a company that manages $10.6 trillion. That’s more than half the United States GDP. Last time, we delved into the shady workings of McKinsey. Today, by popular demand, let’s talk about BlackRock.

Inside the Behemoth: BlackRock’s Vast Reach 🌍

BlackRock is a frequent topic of online speculation. Imagine a robot controlling more wealth than any country on Earth. While Larry Fink is the commander in chief, BlackRock holds stock in 95% of Fortune 500 companies and manages operations for governments worldwide. Their vast network means that virtually any economic interaction—whether it’s buying groceries, driving a car, or applying for a loan—somehow traces back to BlackRock.

But before we dive into whether this mammoth company controls the world or not, let’s examine some crucial elements that give BlackRock its unprecedented power.

What is an Asset Manager? 💼

BlackRock is an asset manager. Their core function is to take a customer’s money and make more money out of it. Their dominance stems largely from a 1970s invention: the index fund. Pioneered by Vanguard’s first CEO, index funds allow investors to bet on all companies in an index rather than focusing on individual stocks.

Passive Investing 🎯

Unlike active investors who constantly buy and sell shares, BlackRock and other big asset managers engage in passive investing. They purchase a portion of every major company and hold those shares indefinitely. This “hands-off” approach gives them significant legal leeway. The large volumes they manage mean they can’t just sell off stocks instantly without crashing their value.

Universal Ownership Explained 🏢

The term “universal ownership” refers to asset managers like BlackRock owning shares across all companies listed on the stock market. BlackRock’s average share in any given company ranges from 3% to 10%. Though this might sound minuscule, it often makes them the largest single shareholder.

Zoom in on Amazon: BlackRock, Vanguard, and State Street collectively own 16% of Amazon’s shares. Jeff Bezos, meanwhile, holds only 9%. Such consolidated ownership means these asset managers have significant voting power over company decisions.

Voting Power and Corporate Control 🎟️

The amount of stock BlackRock holds determines the number of votes they get, often making them a top-three shareholder by voting rights. A 2017 study found that BlackRock generally votes in alignment with company executives’ recommendations. This dynamic has drastically reshaped the corporate landscape.

Shareholder Democracy or Oligarchy? 💰

Back in the day, shareholders—mostly households—owned 94% of stocks, allowing a sort of “democracy for people with disposable income.” However, as of today, households own around 40% of stocks, and half of that is concentrated within the wealthiest 10%.

Thus, decisions made by corporations—driven by asset managers—increasingly benefit only a small percentage of the population.

Impact on Wages and Prices 💵

One stark side effect of this concentrated ownership is wage stagnation. Corporations often increase profits by squeezing workers. Universal ownership also contributes to high prices for consumers. With significant stakes in competing companies (like Nike and Adidas), BlackRock benefits whether or not one outperforms the other.

Anti-Competitive Practices 🚫

Universal ownership diminishes competition, as companies don’t need to merge to align their profits. For example, major U.S. airlines and banks share the same large shareholders, which dampens competitive practices.

Political Influence and Loopholes 🏛️

BlackRock’s tentacles extend into politics as well. There’s a revolving door between BlackRock and significant political entities like the U.S. Treasury and the Federal Reserve. This influence was helpful when the Financial Stability Oversight Council aimed to impose stricter regulations post-2008 financial crisis. BlackRock managed to dodge these by increasing political lobbying efforts.

Self-Reporting Passivity 📝

BlackRock and other asset managers self-certify their passive investing status to avoid additional oversight. This self-regulation is akin to writing whatever you want on your taxes and auditing yourself.

The Financial Echo Chamber 🔄

The biggest investors in BlackRock? Vanguard and State Street. And vice-versa. This circular ownership extends throughout the financial sector, creating an ecosystem where assets circulate within a closed loop, ensuring profitability for asset managers.

Final Thoughts & What Lies Ahead 🔮

So, does BlackRock own everything? No. But do they control everything? Kinda. They influence significant economic decisions and profit from every angle of your life—all while escaping rigorous scrutiny through legal loopholes.

The Consumer Financial Protection Bureau and the FDIC are working to treat large asset managers like banks, but resistance from these powerful entities makes regulation a colossal task.

BlackRock didn’t create the system but has masterfully exploited it. Maybe it’s time we demand a more equitable alternative where the creators of wealth have a say in its distribution.